Jeff has been reporting, analyzing and opining about the retail grocery business since 1973. He has served as publisher of Food TradeNews and Food World since 1978 and as president since 2007. He can be reached at jeff@foodtradenews.com.

Yeah, I get it – UNFI bought the team and they get to make out the lineup card. However, after viewing the beleaguered distributor’s new organizational structure, I wondered why so few legacy Supervalu executives were offered key leadership positions in a company that is banking on the success of Supervalu’s traditional wholesaling business to carry the day.

For example, it was my belief that the extremely competent Mike Stigers (former EVP-wholesale for SVU) was going to serve as Sean Griffin’s right-hand man. Griffin, the veteran UNFI executive, is now chief executive of UNFI’s Supervalu unit and COO of the parent company. In the new lineup, Stigers remains an EVP, but now is in charge of Cub Foods (a retail unit UNFI plans to sell) while also leading the Providence, RI-based wholesaler’s meat and produce departments.

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UNFI veteran Chris Testa, another long-time UNFI executive becomes president and chief marketing officer of the new organization and will oversee the company’s national and regional sales teams. Two key members of his team of interest to readers in our coverage area: the Atlantic region and the South region are headed by UNFI veterans – Mark Bushway and JJ Cantrell respectively.

There are a couple other familiar former Supervalu execs listed in the org chart – Bill Chew, former SVU region president will become SVP- sales, military and international; Brian Audette, former SVP-wholesale for Supervalu is now SVP-merchandising for the new combined entity. Audette reports to John Raiche, EVP-supplier services and merchandising who also comes from the legacy UNFI team.

And why am I critical of such a front-loaded UNFI lineup? Because after seven months of ownership I’m questioning whether these guys are capable. I’m also questioning whether the man at the top of the list, CEO Steve Spinner, is the right man for the job.

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There’s nothing personal here – my opinions have been formed by the comments made by UNFI’s customers, its associates and its vendors. Last month, I detailed some of those comments that focused on disappointing execution and horrible communication between UNFI and the independent retailers that it supplies. There have been issues from erratic service levels to an inability to receive timely and adequate answers to the concerns of its customers in the Mid-Atlantic.

“We understand this is a big transition and bumps in the road are to be expected,” said an executive with one of UNFI’s largest independent retailers in the region. “But this goes beyond a transitional issue. They’ve made changes. We don’t understand some of those changes and they can’t give us the answers that we need in a timely manner. It’s simply not acceptable.”

I read that quote to another UNFI customer who noted: “That’s because the same Supervalu wholesale personnel that calls on us don’t know themselves. They mean well and are trying hard to address our concerns, but they’re like Sgt. Schultz (from the old TV show “Hogan’s Heroes”). They know nothing – because they’ve been told nothing. It’s amazing to me that it’s been nearly a year (the UNFI-Supervalu deal was first announced in July 2018) and they are this far behind. Steve Spinner, Sean Griffin, Chris Testa – do they have any desire at all to meet with their key customers?”

So while their customers continue to fume over increased fees, higher cost of goods, slow moving items and private label strategy, UNFI continues to fumble, bumble and stumble? And I haven’t even mentioned the turmoil associated with UNFI’s ongoing efforts to sell its Shoppers Food & Pharmacy retail operation, its plummeting stock price ($11.80 per share as of May 8); and its recent earnings results ($341 million loss in its Q2).

You usually don’t get a second chance to make a first impression.

‘Round The Trade

Amazon has agreed to lease 537,000 square feet of office space at three buildings in Crystal City, VA as part of its HQ2 expansion effort announced late last year. Additionally, Amazon plans to construct two new buildings to support its Crystal City project that will break ground in the near future. By the end of this year, “Godzilla” plans to hire 400 associates. Ultimately, when HQ2 is completed over the next decade, Amazon hopes to hire 25,000 associates with average annual wages of over $150,000 and predicts that tax revenue will be greater than $3 billion. Already a nightmarish driving endeavor, that part of Northern Virginia will almost certainly turn into one of America’s greatest clusterjams.

More Amazon news: earlier this month, the company opened its first Amazon Go c-store in New York City (Vesey Street in Manhattan, just south of Tribeca). The 1,300 square foot store is Amazon’s 12th “Go” unit and the first that will accept cash. However, it may not be the only non-cash less store for long. The city of San Francisco, where there already are there Amazon Go stores, recently passed an ordinance that would ban cashless brick & mortar stores that would go into effect in the next 30 days. Amazon has said it has been adapting its systems to accept cash after both the city of Philadelphia and the state of New Jersey also banned cashless stores recently.

At its Whole Foods unit, the retailer will move into a new 47,400 square foot office facility in Jersey City, NJ that will serve as its new Northeast division headquarters (the Northeast region oversees about 40 WFM stores in New Jersey, New York and Connecticut). WFM is also opening a store that is nearly the same size a few blocks away. The HQ facility will open later this year, the store will most likely open in late 2020 or 2021. Also finally confirmed is Whole Foods’ entry into upscale Towson, MD where it will build a 45,000 square foot store at the busy intersection of York Road and Towsontown Boulevard. That unit is expected to open 2021…

In other UNFI personnel news, Anne Dament, executive VP-retail merchandising and private brands marketing, and Chad Ferguson, president of its retail operations, have departed. From what I’ve been told, many Supervalu management-level associates signed one year (retention) contracts after UNFI completed the Supervalu acquisition. It will be curious to see how many remain after their agreements expire…

According to Reuters, Save-A-Lot may be on the sales block. The news agency reports that the St. Louis-based hard discounter has engaged the services of investment banker PJ Solomon to explore strategic alternatives (smells like pre-sale mojo). The company is owned by Canadian private equity firm Onex partners, which acquired it from Supervalu for $1.4 billion in 2016. Despite hiring former Lidl US CEO Kenneth McGrath, S-A-L has struggled while also frustrating many of its licensees (the biggest and most profitable part of its business) with what those independent owners claim to be restrictive policies and an unwillingness to implement ideas suggested by the licensees. In its heyday (with Bill Moran and Bill Shaner at the helm), Save-A-Lot was an innovative and well-run operation; today it represents another case of poor ownership and misguided management…

Misguided management? Maybe that won’t be the case at Kraft Heinz anymore as CEO Bernardo Hees will be leaving and Mauricio Patricio (ex Anheuser Busch/InBev) will join the big manufacturer as its new chief executive. Also departing from the Chicago-based firm is Eduardo Luz, U.S. chief marketing and global brand officer, who began with the company in 2013. Kraft Heinz is another organization that could benefit from a more visionary leader and a better go-to-market approach that PE owners 3G Capital and Berkshire Hathaway have failed to provide…

Dollar General, the king of all dollar store retailers, said it would open a whopping 975 new stores this year and remodel 1,000 other units. About half of the upgraded stores will utilize the company’s “Traditional Plus” format which features added cooler space. Fresh produce will also be added to approximately 200 of those remodeled stores. And in another major announcement, the Goodlettsville, TN-based discounter, which operates almost 15,400 stores in 44 states, said it will self-distribute its fresh and frozen foods chainwide. In a new initiative, which was tested last year at a temperature-controlled DC in Pottsville, PA (Schuylkill County – the mecca of food wholesaling in Pennsylvania), the retailer began supplying about 300 of its stores in the Northeast. By the end of its next fiscal year in January 2020, Dollar General expects to add new warehouses that will supply up to 5,000 stores and by 2022 could be fully integrated with its own self-distribution fresh/frozen network…

Lidl, which opened its 65th store on May 1 in Easton, PA (and second in the Keystone State) will not begin converting the 27 Best Market stores (24 on Long Island) it acquired last year to the Lidl format until early next year. The first conversions will be in Babylon and Huntington. An existing Best Market in Hicksville will be closed and replaced by a new facility in nearby Plainview. Additionally, a new Lidl will be built in Center Moriches. Lidl’s volumes have been improving over the past six months, but according to our research, sales are still below what I believe the company originally projected…

Kudos to Chris Lane, Wakefern’s executive VP, who has been named annual chairman of the National Association of Chain Drug Stores (NACDS), the large trade association based in Arlington, VA. Lane, who is one of the rising stars in the biz, began his career as a pharmacist and headed pharmacy operations at Duane Reade (now owned by Walgreens) before joining Wakefern as VP-pharmacy in 2003…

A couple more pharmacy notes: CVS will be closing 46 underperforming stores. Stores in the region being impacted are located in Delaware, New York and Washington, DC. And troubled Rite Aid is off probation and will be listed with full compliance on the New York Stock Exchange. The Camp Hill, PA drug chain has achieved an average share price of $1 for 30 consecutive trading days ended April 30. The “relisting” does come with one footnote: Rite Aid engineered a reverse 1-for-20 stock split to boost the company back into qualifying range. And even with that head start, Rite Aid’s stock price on May 8 was only $8.09 per share, The NYSE originally placed Rite Aid on the non-compliance list in January.

Local Notes

Ahold Delhaize (AD) posted its Q1 sales earlier this month and its U.S. revenue remained solid. Net sales totaled $10.98 billion, up 1.1 percent, and its comps were in the middle part of the industry range at 1.2 percent (excluding fuel). “Our U.S. business showed good performance with margins benefiting from synergies and with savings ahead of investments in our customer proposition as part of our ‘Save four Our Customers Program,’” said company CEO Frans Muller at AD’s analysts call after the numbers were released. Operating income increased 16.9 percent (7.9 percent at constant exchange rates) to $516.3 million.

CFO Jeff Carr added that the company does not expect the recent high margin trend to continue as the company ramps up investments in its customer proposition in the following quarters. Part of those investments will be the major cap-ex outlay at Stop & Shop as it continues to remodel the more than 400 stores in that brand. Not included in the Q1 numbers were the effects of the 11-day UFCW strike at 246 Stop & Shop stores in New England. Ahold Delhaize estimated it lost $200 million in sales during the job action.

Carr said he expects a one-time underlying income hit of $90-$110 million in the next quarter. Muller added: “Nobody has won in this strike, It’s a very unfortunate event for everybody involved.” Other highlights from the call included Food Lion’s upcoming $158 million investment to upgrade 92 stores in South Carolina. Food Lion will also spend $40 million to remodel 23 stores in the Charlottesville and Harrisonburg, VA areas. Muller also noted that the deal to acquire 37 King Kullen stores on Long Island (which would fall under the Stop & Shop brand) has not yet been approved by the Federal Trade Commission.

More about Stop & Shop: we’re hearing some pushback from suppliers and brokers about Stop & Shop’s request to add more vendor labor as it continues to roll out an ambitious store remodeling plan. In an internal memo co-signed by Kerri Aguilo, senior VP-category management; David Bass, senior VP-merchandising; and Marwan Fakhouri, merchandising acceleration lead, Stop & Shop is seeking to add 100 additional reset team members “to ensure that the shelf management needs for all stores are met. We will use our traditional Fair Share Billing approach to allocate these incremental staffing costs, which will take effect in early 2019. We think it is important to share this information with you as early as possible for you to effectively update your financial planning and budgets.”

Stop & Shop began its store remodeling program last October with five Connecticut stores and plans to spend approximately $150 million shortly to upgrade its 51 Long Island stores. By 2023, Stoppie expects to have all 412 stores remodeled at a cost of $1.6-$2 billion. And from Ahold Delhaize USA comes this: Retail Business Services (RBS), the services arm of the company, has rolled out a new replenishment and forecasting system. Relex Solutions, with offices in Atlanta and London, developed the system, which has been testing it for more than a year at Food Lion and Hannaford’s fresh distribution centers.

“By implementing this game-changing solution, Retail Business Services is further enabling Ahold Delhaize USA’s local brands to deliver on their ambitions to be there for their customers anytime, anywhere with the freshest products,” said Chris Lewis, executive VP-supply chain for RBS. “Not only will it provide local brand stores with the flexibility they need to best serve their customers, it will enable a complete supply chain transformation at a time when customer expectations are rapidly changing the way groceries are bought, sold and delivered.”

A tip of the hat to Debbie Hill, Family Foundation manager at RBS, for being named 2019 Corporate Person of the Year by the Children’s Miracle Network. Hill is simply one of the most talented and nicest people in our business. The Giant/Martin’s veteran has served as the key organizer for Ahold Delhaize’s annual golf event through which the retailer has raised tens of millions of dollars for many years. Debbie Hill is a prime example of how selfless leadership, a strong work ethic and a deep sense of charity makes for a great employee and an even better person…

Kudos to Ryan Redner, CEO, and Gary Michael Redner, COO, the third generation of family leadership who have really taken over reins at the regional supermarket chain. The younger Redners, who have been with the company since they were teenagers, assumed their current roles after Ryan’s dad Dick was elevated to chairman in 2017. Their first notable project is the debut of Redner’s Fresh Market in Wyomissing, PA which cut its ribbon last month. It’s a beautiful 54,000 square foot store with innovative ideas and some nice special touches. We’ll see the “Fresh” model being utilized at new Redner’s units under construction in Audubon, PA and Lewes DE as well as in a few other existing stores. And next year, Redner’s will mark the 50th anniversary of the company that was founded by a former Grand Union supervisor – the late, great Earl “The Chief” Redner…

Another huge opening for the latest Wegmans store in Virginia Beach late last month. The uber-merchant’s entry in the Tidewater region was a whopping success and sales during the first 10 days of operation have remained very robust. It’s a big year for the Rochester-based retailer as it plans to open the first of six Raleigh-Durham area stores on September 29 (on Wake Towne Drive in Raleigh). A month later on October 27, Wegmans will debut in New York City with the opening of its 74,000 square foot unit in the Admirals Row development in the old Brooklyn Navy Yard…

Wawa, which has been quietly expanding in Maryland and Virginia (and Washington, DC) will build a 9,000 square foot c-store at Maple Avenue & Nutley Street in the upscale Northern Virginia berg of Vienna. The new store will not have a gas station. By the end of summer, Wawa plans to open three more District of Columbia units in Columbia Heights, Tenleytown and Adams Morgan. It made its DC debut in 2017 on 19 Street NW. The Red Roof, PA c-store operator opened its second District store a year later in Georgetown. More c-store news: Peak Rock Capital, the PE firm that acquired Turkey Hill Dairy in late March, paid $215 million to buy the Conestoga, PA-based dairy, ice cream and drink manufacturer…

The Common Market, a retail food market that began as a buying club in Frederick, MD in 1974 by Randy and Francy Williams, plans to open a second, larger location at a former Safeway store on 7th Street, also in Frederick, about four miles from the original Buckeystown Pike location. The company is now owned by its 6,660 members. The Common Market focuses on local, natural and organic products…

From the obit desk, we have a few deaths to report. I’m sad to report the passing of Jane Golub, 80, wife of Price Chopper executive chairman Neil Golub. A smart, savvy lady with a quick wit, she served as a great partner of 55 years with Neil. And along with her husband, Jane attended virtually every national industry event with her lifetime companion – they were inseparable. A schoolteacher by trade, Jane Golub was also deeply devoted to charity and philanthropy. She will be missed…

Seymour Cassel, a great character actor and prototypical “that guy” has died. Cassel, 84, appeared in more than 200 film and TV roles and received an Academy Award nomination for “Faces” (1968), a movie directed by the late John Cassavetes. All told, Cassavetes used Cassel in five of his movies. Cassel later enjoyed a similar relationship with director Wes Anderson, appearing in three of his films including the hilarious black comedy “The Royal Tenenbaums” (2001). Other movies where Cassel had prominent roles included “Dick Tracy” (1990), “Honeymoon in Vegas” (1992) and “Indecent Proposal” (1993)…

Peter Mayhew, 74, has also left us. The 7-foot-3 actor, who is best known for playing the character Chewbacca in the “Star Wars” movie series passed away last month. Mayhew appeared in the first three “Star Wars” movies and then returned for two other films in the series in 2005 and 2015. Mayhew was working in a London hospital as an orderly when he was recommended to “Star Wars” director George Lucas. It was an ideal marriage, with Mayhew bringing a menacing presence but a warm personality to the character. Although he appeared in a few other acting roles in a career that spanned 39 years, Mayhew and Chewbacca will always remain connected…

From the world of sports, two Hall of Fame athletes from previous eras have also passed on. John Havlicek, who perfected the role of basketball’s “sixth man,” died last month at the age of 79. A great college player at Ohio State (where his teammates were Bobby Knight and Larry Siegfried), Havlicek joined the Boston Celtics in 1962. During his 16-year career, he was usually the first man off the bench in those early Celtic years coached by the legendary Red Auerbach. Havlicek’s speed and basketball savvy provided the Celtics with one of the most versatile players in the league, a whirling dervish with seemingly unlimited stamina who could execute Auerbach’s fast-break philosophy better than any other Celtic (including Bob Cousy). All told, Havlicek’s Celtics teams won eight NBA titles. He was a 13-time all-star and was inducted into the Naismith Memorial Basketball Hall of Fame in 1984…

Leaving us also was the Baltimore Colts’ great defensive end Gino Marchetti. In the late 1950s, Marchetti’s ferocious bull rushing styled coupled with unusual quickness for such a big man (for his era) helped the NFL evolve into a more modern age. During his 14-year career, Marchetti won two NFL championships and was selected to 11 Pro Bowls. He was inducted into the NFL Hall of Fame in 1972. While still playing for the Colts in 1959, Marchetti, along with several teammates, opened a fast food restaurant in Baltimore called Gino’s Hamburgers. The franchise ultimately grew to 313 locations and was sold to Marriott in 1982 for $48.6 million. Marchetti was 93.

foodtradenews.com, from the publisher of Food Trade News, Food World, and the Grocery Industry Directory, is the authoritative source for news, data, and analysis about the retail food & drug industry in the Northeast and Southeast markets.